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Case Law Details

Case Name : Vazhakkulam Block Rural Co-Operative Society Ltd Vs ITO (Kerala High Court)
Appeal Number : WP(C) No. 13727 of 2023
Date of Judgement/Order : 29/11/2023
Related Assessment Year :
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Vazhakkulam Block Rural Co-Operative Society Ltd Vs ITO (Kerala High Court)

The Kerala High Court, in the case of Vazhakkulam Block Rural Co-Operative Society Ltd vs. ITO, has set aside Section 148 A(b) and the corresponding Notice, emphasizing the denial of personal hearing to the petitioner. This decision echoes a previous judgment, establishing the importance of providing an opportunity of personal hearing before issuing notices under Section 148.

Detailed Analysis:

i. Denial of Personal Hearing: The petitioner challenged the Ext.P5 order and Ext.P6 Notice, asserting that personal hearing was not granted before passing the order under Section 148 A(b). The High Court, referring to a precedent, highlighted the necessity of personal hearing as envisaged in Section 148A(b).

ii. Legal Interpretation of Section 148A(b): The judgment analyzed Section 148A(b), emphasizing the obligation to provide an opportunity of personal hearing to the assessee. The court clarified that personal hearing goes beyond merely filing a reply to the show cause notice, emphasizing the need for a meaningful interaction with the petitioner.

iii. Unsustainability of Ext.P5 Order and Ext.P6 Notice: Based on the interpretation of Section 148A(b) and the precedent, the court deemed the Ext.P5 order and Ext.P6 Notice as unsustainable. Consequently, the court set aside these documents, directing the petitioner to appear before the respondent with relevant documents for a proper personal hearing.

iv. Direction for Fresh Proceedings: The court directed the petitioner to appear before the assessing officer on a specified date, ensuring a fair opportunity for personal hearing. It emphasized that if the petitioner fails to appear, no further opportunities will be granted. The assessing officer is instructed to proceed with fresh proceedings and the notice under Section 148 after considering the petitioner’s submission.

Conclusion: The Kerala High Court’s decision in Vazhakkulam Block Rural Co-Operative Society Ltd vs. ITO underscores the significance of providing a fair opportunity of personal hearing before initiating proceedings under Section 148. The court’s direction for fresh proceedings ensures procedural fairness and upholds the principles of natural justice. This judgment sets a precedent for cases involving Section 148 A(b) and reinforces the importance of due process in income tax assessments.

FULL TEXT OF THE JUDGMENT/ORDER OF KERALA HIGH COURT

1. The present writ petition has been filed impugning the Ext.P5 order under Section 148 A(b) and Ext.P6 Notice under Section 148 of the Income Tax Act.

2. Admittedly, before passing the impugned Ext.P5 order, personal hearing was not afforded to the petitioner. The issue is covered by the judgment of this Court in the case of Asamannoor Service Co-operative Bank Ltd. Vs. the Income Tax Officer in WP (C) No. 12595 of 2023 dated 17.10.2023.

3. After considering the language under Section 148 A(b), paragraph 6 & 7 of the judgment of this Court held as under.

“6. Heading of Section 148A itself provides conducting of enquiry, providing opportunity before issuance of notice under Section 148. Section148A(b) reads as under:

“Provide an opportunity of being heard to the assessee, with the prior approval of specified authority, by serving upon him a notice to show cause within such time, as may be specified in the notice, being not less than 7 days and but not exceeding 30 days from the date on which such notice is issued, or such time, as may be extended by him on the basis of an application in this behalf, as to why a notice u/s 148 should not be issued on the basis of information which suggests that income dischargeable to tax has escaped assessment in his case for the relevant assessment year and results of enquiry conducted, if any as per clause (a)”

7. Section 148A(b) begins with “provide an opportunity of being heard to the assessee”. Hearing does not mean filing reply to the show cause notice. If the provision of this Section contemplates opportunity of being heard that has to be construed as personal hearing. Therefore, I do not find substance in the submission of learned Standing Counsel that an opportunity of being heard to the assessee contemplated under Section 148A(b) does not necessarily mean personal hearing. In my view, opportunity of being heard means an opportunity of personal hearing to the assessee.”

4. In view thereof, I find Ext.P5 order and Ext.P6 notice are unsustainable. Therefore, the same are set aside and the petitioner is directed to appear before the respondent on 12.12.2023 with all the relevant documents in his possession. On his appearance, the petitioner shall be afforded an opportunity of being heard. After considering the submission of the assessee, the assessing officer should proceed to pass a fresh order, and thereafter, proceed with the notice under Section 148 of the Income Tax Act. It is made clear that, if the petitioner does not appear on 12.12.2023, no further opportunity shall be granted to the petitioner for hearing.

5. With the aforesaid direction, the present writ petition stands finally disposed of.

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